Correlation Between Recruit Holdings and MERCK Kommanditgesells

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Can any of the company-specific risk be diversified away by investing in both Recruit Holdings and MERCK Kommanditgesells at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Recruit Holdings and MERCK Kommanditgesells into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Recruit Holdings Co and MERCK Kommanditgesellschaft auf, you can compare the effects of market volatilities on Recruit Holdings and MERCK Kommanditgesells and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Recruit Holdings with a short position of MERCK Kommanditgesells. Check out your portfolio center. Please also check ongoing floating volatility patterns of Recruit Holdings and MERCK Kommanditgesells.

Diversification Opportunities for Recruit Holdings and MERCK Kommanditgesells

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Recruit and MERCK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Recruit Holdings Co and MERCK Kommanditgesellschaft au in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK Kommanditgesells and Recruit Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Recruit Holdings Co are associated (or correlated) with MERCK Kommanditgesells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK Kommanditgesells has no effect on the direction of Recruit Holdings i.e., Recruit Holdings and MERCK Kommanditgesells go up and down completely randomly.

Pair Corralation between Recruit Holdings and MERCK Kommanditgesells

Assuming the 90 days horizon Recruit Holdings Co is expected to generate 0.99 times more return on investment than MERCK Kommanditgesells. However, Recruit Holdings Co is 1.01 times less risky than MERCK Kommanditgesells. It trades about 0.07 of its potential returns per unit of risk. MERCK Kommanditgesellschaft auf is currently generating about -0.15 per unit of risk. If you would invest  1,200  in Recruit Holdings Co on August 29, 2024 and sell it today you would earn a total of  122.00  from holding Recruit Holdings Co or generate 10.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Recruit Holdings Co  vs.  MERCK Kommanditgesellschaft au

 Performance 
       Timeline  
Recruit Holdings 

Risk-Adjusted Performance

5 of 100

 
Weak
 
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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Recruit Holdings Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Recruit Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.
MERCK Kommanditgesells 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MERCK Kommanditgesellschaft auf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Recruit Holdings and MERCK Kommanditgesells Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Recruit Holdings and MERCK Kommanditgesells

The main advantage of trading using opposite Recruit Holdings and MERCK Kommanditgesells positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Recruit Holdings position performs unexpectedly, MERCK Kommanditgesells can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MERCK Kommanditgesells will offset losses from the drop in MERCK Kommanditgesells' long position.
The idea behind Recruit Holdings Co and MERCK Kommanditgesellschaft auf pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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